TBS Partners

Meet a CEO: Steve Vamos of Xero

We sat down with Steve Vamos, the CEO of Xero – producers of the highly popular accounting software platform for small and medium-sized businesses – to talk about the Cloud, change, and the challenges in encouraging emotional intelligence in business.

 

What first attracted you to the finance/fintech industry or, at least, this incarnation of it?

I’ve been fortunate to have spent close to 40 years working in technology. After studying civil engineering, I began my career at IBM. I’ve held executive roles at Apple and ran a large part of the international online business at Microsoft in the U.S. at a time of rapid growth and innovation.

When returning to Australia, I took on various non-executive director and advisory roles across a whole range of different industries including fintech.

After consulting with the Xero leadership team and Board, I was particularly interested in Xero’s strategy and how the company was transforming the accounting industry and helping small businesses be more successful. It was clear that cloud computing was going to be transformational, so I leapt at the opportunity to lead such an innovative and exciting company.

 

What are the key ideas or concepts you’ve learned since being CEO?

In my years of working in technology, I’ve seen many waves of change. Ultimately, the winners are defined by the extent to which they make a difference to their customers. It’s important to regularly re-evaluate your purpose and mission to ensure you remain relevant and are providing value to the customers you serve.

Leadership capability and a values-driven culture in organizations are critical to creating environments that allow people to question the status quo and explore new ideas. Leaders must surround themselves with the right people who are not afraid to ask the tough questions. I’ve learned that my leadership role is more like a head coach, rather than a star player. I’m there to support decisions and provide guidance. It means I spend a lot of time involving people in developing and seeing the big picture – our ‘why’ and our priorities.

 

What do you see as the most exciting developments in the industry?

Cloud computing has transformed so many different industries and opened up enormous opportunities for people to really explore new ways of working and living. The great thing is we’ve barely scratched the surface of what’s possible for small business to benefit. We’re seeing so many more people, particularly young people, wanting to start their own businesses and they feel very optimistic about the future.

In Australia and New Zealand, we have around 50% of people using cloud accounting, but globally it’s at less than 20%. We have a huge opportunity to accelerate the adoption of cloud and enable many more small businesses benefit from doing their books in the cloud and linked to the Xero platform. We have over 200 banks and financial institutions and 800+ apps linked to the platform – all of these connections making it more seamless, simple, and smarter to do business.

Governments have also jumped on board driving technology adoption with the digitization of tax and compliance systems. We’re seeing initiatives in Australia like single touch payroll, ‘payday filing’ in New Zealand, and in the UK making tax digital and ‘open banking.’ These are all initiatives governments are driving to encourage the adoption of technology and interacting digitally between small business and government. There’s a tremendous benefit for small business as it streamlines processes, reduces errors, and saves time.

The disruption of financial services is also driving new developments in the industry, which could ultimately lead to a cashless society, whether it be through new payment methods or the use of systems such as e-invoicing. Cash flow and getting paid on time are still the biggest challenges for small businesses.

Digital payment solutions are helping small businesses by ensuring that when an invoice is created in their accounting system, they also provide a payment solution for their customers to make the whole process simple and convenient, and payments being made much faster.

 

Is the role you have one which has you learning new things all the time? What do you know now that you didn’t know before you took on the CEO’s role?

I have a much greater appreciation of the importance of helping small businesses across the world succeed. Small business has been underserved for too long. Over half of them fail in the first five years, with the number one cause being cash flow. Small business is family, it’s our community, it creates jobs and drives innovation. I’ve learned that Xero is in a unique position to make a real difference to the lives of small business owners and their advisers and we have a passionate and very committed group of people who work to achieve this every day.

 

Our human approach means we put people first. We work closely with accountants and bookkeepers to solve big challenges on behalf of small businesses.

 

Yours is a competitive marketplace. What makes Xero stand out from the pack?

Born in the cloud, Xero is an open platform. Our API allows our customers to connect with the tools they need to run their business. We’ve now got over 800 apps in our ecosystem, providing more choice than ever for small businesses to use the best applications connected to Xero that meet their unique requirements. Recently, we announced at Xerocon that advisers can now curate that Marketplace to ensure that businesses get a tailored experience and focus on choosing the right tools at the right time.

Our human approach means we put people first. We work closely with accountants and bookkeepers to solve big challenges on behalf of small businesses.

Every day, the accountants and bookkeepers we support provide services that make a difference in their local communities. Our partner-first approach enables us to help our customers successfully navigate through periods of change and thrive in the long term. We’re committed to working in partnership with accountants and bookkeepers to help small businesses succeed. Xero now has more than 200 connections to banks and financial services partners around the world.

Our near term focus on continued platform growth is about driving workflows and deeper partnerships with financial service providers and banks – especially in the area of payments where we’ve extended our partnership with Stripe, a leading payment provider, to deliver a seamless payment service integration into Xero’s core invoicing workflow.

 

What strategies, marketing or otherwise, have you employed to make this happen?

There are three key priorities for our business. Firstly, driving the adoption of cloud accounting. We’ll do that by educating small business owners, accountants, and bookkeepers on how it can transform their business and practice to drive efficiency. The second element is to continue to build the Xero platform. Once accountants, bookkeepers, and small businesses are on the Xero platform, there’s a broad range of new applications they can use to streamline day-to-day tasks. That includes applications like projects, expenses, payroll, and bank feeds.

Our third strategic priority is critical for us as Xero continues to grow and evolve and reflects the need for us to build today, the capabilities that will support a business that in three or four years will be significantly larger than we are today. We’re focused on growing our talent and tuning all our business processes for operational excellence.

 

Technology is the key enabler for many organizations to work well and be successful, but enterprise success comes from the people and culture of an organization.

 

What are some of your company’s most notable recent achievements?

It doesn’t take a lot of analysis to appreciate how special Xero is. It’s accomplished a lot in a relatively short time serving firms and providing the technology to help them manage their business and grow. We recently announced Xero’s half-year financial and operating results to 30 September 2019, during the period we achieved a significant milestone: surpassing two million subscribers globally. While it took more than a decade to add Xero’s first million subscribers, it took just two and a half years to add the next million.

Our operating revenue was up, we saw a 30% growth in annualized monthly recurring revenue, growth in total subscribers, total subscriber lifetime value grew, free cash flow was up, our net profit after tax increased – our first positive H1 net profit result.

On our platform, we’re harnessing AI and machine learning technology to give accountants and bookkeepers better control of their business and to save them time. With the acquisition of Hubdoc, Xero has turbo-charged our data automation capabilities within the platform.

Today, Xero’s Hubdoc processes twice the number of documents than it did 12 months ago, making it one of the fastest automated platforms on the market. We’re working towards enabling 100% of all data extraction to be powered by machine learning technology to give time back to accountants, bookkeepers and small businesses.

 

The importance of Emotional Intelligence (EQ) has been getting a lot of talk in recent years within the business sector. How important do you see EQ as being within an organization?

Creating a positive culture where people feel valued and motivated to do their best work is critical. The fate of an organization is defined by the mindset of the people and leaders who work there.

If I’ve learned one lesson from being on both sides of the Boardroom table, it’s the leadership mindset that has a massive influence. Technology is the key enabler for many organizations to work well and be successful, but enterprise success comes from the people and culture of an organization.

It’s so important to make sure you have the right people in the right roles. That also relates to a Board’s perspective on culture. Understanding the mindset of the CEO running the company. That mindset will define the landscape of the organization.

Leaders today should be championing EQ in their roles. Gone are the days where managers tell their employees to simply do their job. Because the world is changing so fast, business leaders today are asking their people to be innovative, creative, and come up with new ideas to help shape the future.

To do that, people and culture need to be at the heart of the company. If you look at listed companies today, the value in those companies is no longer defined by physical and financial value on the balance sheet. The real value is the expectation that people are going to create new products and services for the future.

 

Has promoting or encouraging EQ in staff something you have found to be a challenge and, if so, how have you overcome this challenge?

I think most people must put in an effort to be comfortable and manage emotions in the workplace – to recognize flaws and rectify behaviors, if required, takes practice. At Xero, we talk a lot about psychological safety and the ability to create an environment where people feel they can be heard, be themselves – so they’re not afraid to ask questions, or even question the status quo. I know from my experience working across different companies, the impact of a leader on people is very profound.

With so much change going on in our world, leaders have to confront fear of change and build belief among people in the organization that change is a good thing. We have to set the example. This isn’t easy but will encourage people to think more positively and creatively. I think feedback is also so important no matter what level of the business you are. You can only grow and improve when you receive constructive feedback.

 

What does the future look like for Xero? What’s next?

To keep innovating, keep improving what we can offer small business in our existing markets, and continue our expansion into new markets.

We’re on a journey to drive cloud adoption – this will continue to be a focus for us at Xero. We’re also refocusing the way we look at our customers and trying to find more ways to support small businesses. Ultimately, we want them to have a robust platform that enables them to do more business inside Xero, as opposed to just recording their business.

Our near-term focus on continued platform growth is all about driving workflows and deeper partnerships with banks and financial service providers, as well as growing our ecosystem of apps that integrate with our platform.

 

 

ushdhanak.com presents this ‘Meet a CEO’ series.

Ush Dhanak is a qualified and certified Executive Coach, Emotional Intelligence Coach, Neuro Leadership and Mediation coach. She has worked with a variety of corporate clients ranging from the Australia Federal Police, Smeg Australia, as well as clients in hospitality and dental. An expert in Emotional Intelligence and how to improve it, she can be found at the link above.

 

 

 

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